Core Viewpoint - Octillion Power Systems has expanded its partnership with Vision Marine Technologies to produce high-voltage lithium-ion battery packs for marine propulsion systems, manufactured at Octillion's Reno, Nevada facility [1][3]. Company Overview - Octillion is a California-based Tier 1 supplier of high-density lithium-ion battery systems, focusing on electrification across various industries including automotive, marine, and energy storage systems [7]. - The company has delivered over 2 million EV battery systems, which have collectively driven more than 4.5 billion kilometers [7]. Partnership Details - Under the new agreement, Octillion will manufacture Vision-branded battery packs specifically for the E-Motion™ 180E electric outboard system, aimed at the U.S. market [3][4]. - These battery packs are designed to withstand harsh marine environments while providing high energy density and durability, suitable for both commercial and recreational use [3][4]. Technological Advancements - The new battery systems will incorporate technological improvements from Octillion's existing product line, including increased power, extended range, and ease of integration [4][5]. - Octillion's manufacturing capabilities in Reno will facilitate faster production and distribution, enhancing the supply chain for Vision Marine Technologies [5]. Market Position - Octillion operates 11 manufacturing facilities across the U.S., India, and China, positioning itself as a leader in the transition to clean energy in electric transportation [5][7]. - The company emphasizes its commitment to providing clients with high-quality, purpose-built power solutions [5].

Core Insights - Vision Marine Technologies is at the forefront of electric marine propulsion, focusing on transforming recreational boating with integrated electric systems and strategic partnerships [1][2] - The company aims to deliver scalable electric solutions that enhance performance and simplicity compared to traditional gas-powered systems [2] Product Development - Vision Marine's flagship product is the E-Motion™ 180E, a 180-horsepower electric propulsion system available in inboard and outboard formats, deployed across over 22 boat models from more than 10 brands [6] - The E-Motion™ Powerpack is a modular propulsion unit designed for pontoon boats, supporting factory-level integration [7] - A new 24-foot electric pontoon developed in partnership with Massimo is being distributed through over 600 dealers in the U.S., marking a significant milestone in Vision Marine's expansion strategy [8] Intellectual Property and Innovation - Vision Marine has filed 15 patents to date, with 12 granted and 3 filed in the last 60 days, focusing on innovations such as overload protection systems and adaptive water pump control [8][9] Strategic Partnerships and Market Focus - The partnership with STERK has led to the integration of Vision Marine's propulsion system into redesigned vessels, emphasizing a collaborative approach to innovation [9] - The company is focused on expanding commercialization of the E-Motion™ platform through OEMs and direct sales, evaluating dealership acquisitions for vertical integration, and growing recurring revenue through rentals and licensing [11]

[Condensed Interim Consolidated Financial Statements](index=1&type=section&id=Condensed%20Interim%20Consolidated%20Financial%20Statements) [Consolidated Statements of Financial Position](index=2&type=section&id=Consolidated%20statements%20of%20financial%20position) As of November 30, 2024, Vision Marine's total assets increased to $13.26 million from $11.42 million at August 31, 2024, primarily due to a significant rise in cash from $63k to $964k Consolidated Statements of Financial Position Summary | | As at November 30, 2024 ($) | As at August 31, 2024 ($) | | :--- | :--- | :--- | | **Total current assets** | 10,555,566 | 8,613,567 | | **Total assets** | **13,257,121** | **11,420,241** | | **Total current liabilities** | 3,664,490 | 7,689,681 | | **Total liabilities** | **4,125,611** | **8,400,254** | | **Total shareholders' equity** | **9,131,510** | **3,019,987** | | **Deficit** | (67,203,876) | (65,609,357) | - Cash increased significantly to **$963,580** from **$63,126**[3](index=3&type=chunk) - Trade and other payables were more than halved, decreasing from **$4.50 million** to **$2.06 million**[3](index=3&type=chunk) - Derivative liabilities (current and long-term) saw a major reduction from a combined **$2.18 million** to **$370k**[3](index=3&type=chunk) [Consolidated Statements of Changes in Equity (Deficit)](index=3&type=section&id=Consolidated%20statements%20of%20changes%20in%20equity%20%28deficit%29) For the three months ended November 30, 2024, shareholders' equity increased from $3.02 million to $9.13 million, primarily driven by $7.58 million raised from securities issuance Consolidated Statements of Changes in Equity (Deficit) Summary | Description | For the three-month period ended Nov 30, 2024 ($) | | :--- | :--- | | **Shareholders' equity, beginning of period** | 3,019,987 | | Total comprehensive loss | (1,602,337) | | Securities issuance, net of transaction costs | 7,438,849 | | Preferred shares converted | 136,689 | | Share-based compensation | 138,322 | | **Shareholders' equity, end of period** | **9,131,510** | [Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Consolidated%20statements%20of%20comprehensive%20income%20%28loss%29) The company experienced a significant downturn in performance for the three months ended November 30, 2024, with revenues plummeting to $142,411 from $986,392 in the prior-year period Consolidated Statements of Comprehensive Income (Loss) Summary | Metric | Q1 2025 (ended Nov 30, 2024) ($) | Q1 2024 (ended Nov 30, 2023) ($) | Change | | :--- | :--- | :--- | :--- | | **Revenues** | 142,411 | 986,392 | -85.6% | | **Gross Profit (Loss)** | (50,440) | 435,528 | N/A | | **Net Finance Income** | (1,403,947) | (5,224,179) | N/A | | **Net Income (Loss)** | **(1,594,519)** | **1,025,129** | N/A | | **Basic and Diluted EPS** | **(1.97)** | **11.97** | N/A | - The significant positive Net Finance Income in both periods is primarily due to large non-cash gains on the revaluation of derivative liabilities[7](index=7&type=chunk) [Consolidated Statements of Cash Flows](index=5&type=section&id=Consolidated%20statements%20of%20cash%20flows) For the three months ended November 30, 2024, the company used $5.71 million in cash from operating activities, while financing activities provided $6.62 million, resulting in a net cash increase of $900,454 Consolidated Statements of Cash Flows Summary | Cash Flow Activity | Three months ended Nov 30, 2024 ($) | Three months ended Nov 30, 2023 ($) | | :--- | :--- | :--- | | **Cash used in operating activities** | (5,711,105) | (4,104,665) | | **Cash provided by (used in) investing activities** | (8,606) | 11,326 | | **Cash provided by financing activities** | 6,620,165 | 1,576,070 | | **Net increase (decrease) in cash** | 900,454 | (2,517,269) | | **Cash, beginning of period** | 63,126 | 3,359,257 | | **Cash, end of period** | 963,580 | 841,988 | - The primary source of cash was **$6.79 million** from the issuance of Voting Common Shares and warrants[9](index=9&type=chunk) [Notes to the Condensed Interim Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20the%20condensed%20interim%20consolidated%20financial%20statements) [Note 1: Incorporation and Nature of Business](index=6&type=section&id=1.%20Incorporation%20and%20nature%20of%20business) Vision Marine Technologies Inc. primarily manufactures, sells, and rents electric boats, with highly seasonal operations where quarterly results are not indicative of future performance - The company's principal business is the manufacture, sale, and rental of electric boats[10](index=10&type=chunk) - Business operations are highly seasonal. Boat sales are highest in the fourth quarter (June-August), while rentals are highest from May to August[13](index=13&type=chunk)[14](index=14&type=chunk) [Note 2: Basis of Preparation and Going Concern Uncertainty](index=6&type=section&id=2.%20Basis%20of%20preparation%20and%20going%20concern%20uncertainty) The financial statements are prepared under IAS 34, highlighting a material uncertainty regarding the company's ability to continue as a going concern due to recurring losses and negative operating cash flows - **Going Concern Uncertainty:** The company has incurred recurring losses, has a deficit of **$67.2 million**, and negative operating cash flows, which indicates a material uncertainty and raises substantial doubt about its ability to continue as a going concern[17](index=17&type=chunk) - Management's plan to address this includes seeking additional financing from public and private markets. During the quarter, the company raised net proceeds of **$6,786,619** from issuing common shares[19](index=19&type=chunk) - The company implemented two reverse stock splits: a **1-for-15** split on August 22, 2024, and a **1-for-9** split on October 8, 2024[28](index=28&type=chunk) - Adoption of amendments to IAS 1 resulted in the reclassification of certain derivative liabilities from long-term to current liabilities, affecting the presentation for both November 30, 2024, and the comparative period of August 31, 2024[29](index=29&type=chunk)[31](index=31&type=chunk) [Note 12: Long-term Debt](index=18&type=section&id=12.%20Long-term%20debt) As of November 30, 2024, the company's long-term debt totaled $444,159, consisting of term loans with interest rates between 9.44% and 13.87%, and a temporary bridge loan was fully repaid during the quarter Long-term Debt Summary | Debt Component | As at Nov 30, 2024 ($) | As at Aug 31, 2024 ($) | | :--- | :--- | :--- | | Term loans | 444,159 | 458,640 | | Current portion | (106,355) | (101,397) | | **Long-term portion** | **337,804** | **357,243** | - On September 2, 2024, the company obtained a temporary bridge loan of **$270,500** at **30%** annual interest, which was repaid in full on September 17, 2024. The loan incurred a processing fee of **$74,762**[47](index=47&type=chunk) [Note 13: Derivative Liabilities](index=18&type=section&id=13.%20Derivative%20liabilities) The company's derivative liabilities significantly decreased during the quarter, resulting in a total gain of $1.67 million that impacted net finance income, driven by revaluation and conversions of warrants and preferred shares [Warrants Issued to Common Shareholders](index=18&type=section&id=13.1%20Warrants%20issued%20to%20common%20shareholders) The derivative liability for warrants issued to common shareholders was reduced to zero as of November 30, 2024, resulting in a non-cash gain of $30,564 recorded in net finance income Warrants Issued to Common Shareholders Derivative Liability | Description | As at Nov 30, 2024 ($) | As at Aug 31, 2024 ($) | | :--- | :--- | :--- | | Opening balance | 30,564 | 5,558,822 | | Change in estimate of fair value | (30,564) | (7,190,449) | | **Closing balance** | **—** | **30,564** | [Series A Convertible Preferred Shares](index=19&type=section&id=13.2%20Series%20A%20Convertible%20Preferred%20Shares) The derivative liability for Series A Convertible Preferred Shares decreased from $694,232 to $144,247 due to conversions into common stock and a net revaluation gain of $413,296 - During the quarter, **400** Series A Convertible Preferred Shares were converted into **9,877** Voting Common Shares at a value of **$136,689**[61](index=61&type=chunk) - The company recorded a net gain of **$413,296** related to the valuation of these instruments in net finance income for the quarter[63](index=63&type=chunk) [Series B Convertible Preferred Shares](index=23&type=section&id=13.3%20Series%20B%20Convertible%20Preferred%20Shares) The derivative liability for Series B Convertible Preferred Shares significantly reduced from $1.46 million to $226,034, driven by a large revaluation gain of $1.23 million recorded in net finance income - The company recorded a net gain of **$1,229,560** related to the valuation of these instruments in net finance income for the quarter[67](index=67&type=chunk) Series B Convertible Preferred Shares Derivative Liability | Description | As at Nov 30, 2024 ($) | As at Aug 31, 2024 ($) | | :--- | :--- | :--- | | Opening balance | 1,455,594 | — | | Revaluation at the end of the period | (2,019,193) | (4,642,780) | | Accelerated amortization of the deferred loss | 789,633 | 376,598 | | **Closing balance** | **226,034** | **1,455,594** | [Note 14: Related Party Transactions](index=25&type=section&id=14.%20Related%20party%20transactions) The company engaged in significant transactions with related parties, including $2.76 million in R&D expenses and inventory deposits with MAC Engineering, SASU, and paid $454,390 in remuneration to directors and key management - Transactions for R&D expenses & Inventory Deposits with MAC Engineering, SASU, a company controlled by key management, totaled **$2,759,362** for the quarter, a substantial increase from **$791,906** in the prior-year period[70](index=70&type=chunk) Remuneration of Directors and Key Management | Remuneration of Directors and Key Management | Three months ended Nov 30, 2024 ($) | Three months ended Nov 30, 2023 ($) | | :--- | :--- | :--- | | Wages | 356,486 | 502,015 | | Share-based payments | 97,904 | 88,142 | | **Total** | **454,390** | **590,157** | [Note 15: Capital Stock](index=26&type=section&id=15.%20Capital%20stock) During the three months ended November 30, 2024, the company significantly increased its issued capital by issuing 1,198,003 shares through private and at-the-market offerings, raising $6.85 million in net cash proceeds - Issued **377,778** Voting Common Shares in a private placement for **$3.57 million** in net cash proceeds[76](index=76&type=chunk) - Issued **695,583** Voting Common Shares through an "at the market" offering for **$3.28 million** in net cash proceeds[77](index=77&type=chunk) - Issued **124,642** Voting Common Shares in exchange for services (marketing, consulting, board fees) valued at **$591,571**[74](index=74&type=chunk) - A **1-for-9** reverse stock split was implemented on October 8, 2024[78](index=78&type=chunk) [Note 16: Share-Based Payments](index=28&type=section&id=16.%20Share-based%20payments) The company recorded a total share-based payment expense of $138,322 for the quarter, comprising $18,337 for stock options and $119,985 for warrants granted to an underwriter Share-Based Payment Expense Summary | Share-Based Payment Expense | Three months ended Nov 30, 2024 ($) | Three months ended Nov 30, 2023 ($) | | :--- | :--- | :--- | | Stock options | 18,337 | 74,333 | | Warrants | 119,985 | — | | **Total Expense** | **138,322** | **74,333** | - On September 16, 2024, the company granted an underwriter the option to purchase **18,896** Voting Common Shares at an exercise price of U.S. **$11.25** (**$15.29**)[86](index=86&type=chunk) [Note 17: Revenues](index=31&type=section&id=17.%20Revenues) Total revenues for the quarter ended November 30, 2024, were $142,411, a steep 85.6% decline from $986,392 in the same period last year, primarily due to a collapse in boat rental and club membership revenue Revenue Breakdown | Revenue Source | Three months ended Nov 30, 2024 ($) | Three months ended Nov 30, 2023 ($) | | :--- | :--- | :--- | | Sales of boats | 89,031 | 88,093 | | Sales of parts and boat maintenance | 31,361 | 30,497 | | Boat rental and boat club membership revenue | 22,019 | 867,802 | | **Total Revenues** | **142,411** | **986,392** | [Note 20: Segment Information](index=32&type=section&id=20.%20Segment%20information) The company operates in two segments, 'Sale of electric boats' and 'Rental of electric boats', with the Sales segment generating $120,392 in external revenue and reporting a pre-tax loss of $1.61 million, largely due to non-cash derivative gains Segment Performance (Q1 2025) | Segment (Q1 2025) | Revenue from external customers ($) | Segment profit (loss) before tax ($) | Segment assets ($) | | :--- | :--- | :--- | :--- | | Sale of electric boats | 120,392 | (1,610,743) | 21,595,409 | | Rental of electric boats | 22,019 | 48,539 | 1,753,763 | - The pre-tax loss in the 'Sale of electric boats' segment for Q1 2025 includes a gain on derivative liabilities of **$1,673,420**[98](index=98&type=chunk) - For comparison, in Q1 2024, the 'Sale of electric boats' segment reported a profit of **$1,126,640**, which included a derivative gain of **$5,411,168**[98](index=98&type=chunk)[99](index=99&type=chunk) [Note 22: Commitments](index=34&type=section&id=22.%20Commitments) The company has significant future financial commitments, including minimum purchase obligations totaling $3.14 million for fiscal year 2025 and $1.27 million for 2026, along with undiscounted lease commitments for a new premises Unconditional Purchase Obligations | Unconditional Purchase Obligations | Amount ($) | | :--- | :--- | | 2025 | 3,143,058 | | 2026 | 1,272,764 | [Note 23: Subsequent Events](index=34&type=section&id=23.%20Subsequent%20events) After the quarter ended, the company continued its financing activities, issuing 1.92 million shares through its "at-the-market" facility for $5.81 million in gross proceeds and converting all remaining Series A Convertible Preferred Shares - Between Dec 1, 2024, and Jan 9, 2025, the company raised **$5.81 million** in gross proceeds by issuing **1,917,537** shares via its "at-the-market" facility[104](index=104&type=chunk) - On December 21, 2024, all remaining Series A Convertible Preferred Shares were converted into **48,177** Voting Common Shares. No Series A shares remain outstanding[105](index=105&type=chunk)

Core Insights - The electric boats market is projected to reach $16.6 billion by 2031, indicating significant growth potential in the industry [1] - Vision Marine Technologies Inc. is a pioneer in electric boating, recognized for its innovative E-Motion™ Electric Marine Powertrain Technology [10] Company Overview - Vision Marine Technologies was founded in 2002 and has over 3,000 small electric boats produced for rental operations and hotels [3] - The company has developed an inboard electric high voltage system capable of speeds between 40 to 42 miles per hour, suitable for water skiing [3] - Currently, Vision Marine builds 50 to 60 small electric boats annually and has completed 21 integrations with various boat manufacturers [4] Technological Advancements - The company’s electric powertrain set a new speed record of 116 miles per hour in 2022 and 2023, showcasing its competitive edge [5] - Electric outboards offer benefits such as reduced environmental impact, lower fuel costs (approximately $5 per full charge), and less maintenance [6] - Vision Marine's technology includes a high voltage, high amperage, and cooling capabilities, allowing for heavy boating in warm environments without overheating [8] Market Expansion - Vision Marine is expanding into the pontoon market with six different integrations, targeting areas with limited fuel stations [7] - The company plans to offer at least 20 different product types in the near future, including three brands of pontoons and four types of smaller boats [8] Financial Outlook - The company is optimistic about doubling sales from the previous year and plans to participate in 10 to 12 boat shows [9] - Vision Marine has undergone a recent rollback to meet NASDAQ compliance and is currently assessing its cash position [9]

Core Insights - The global electric boats market is projected to grow at a CAGR of 10.4%, increasing from USD 5.6 billion in 2023 to USD 15.1 billion by 2033, with demand expected to be 2.7 times higher by 2034 [2][3] Company Developments - Vision Marine Technologies Inc. has entered a significant partnership with Massimo Marine to create a fully integrated 30-foot electric pontoon platform for both commercial and recreational markets, marking a strategic shift towards direct consumer sales [3][6] - The partnership aims to leverage Vision Marine's electric propulsion technology and Massimo Marine's manufacturing capabilities to deliver high-quality electric marine products efficiently [6][9] - Vision Marine has also announced a collaboration with Smoker Craft Inc. to produce a pontoon platform designed to integrate Vision Marine's high-performance electric propulsion systems [9] Market Trends - The US pontoon boat market saw sales of 115,000 units in 2023, reflecting a 5% increase from 2022, indicating a growing demand for versatile and family-friendly watercraft [5] - The electric boating sector is witnessing increased partnerships and collaborations, which are essential for driving growth and innovation in the industry [2][18] Technological Innovations - Vision Marine is recognized for its E-Motion™ Electric Marine Powertrain Technology, which provides a zero-emission boating experience and has set multiple electric world speed records [7][8] - Microvast Holdings has partnered with Evoy to integrate high-power battery packs into leisure boats, enhancing safety, reliability, and performance in electric boating applications [10][11][12] Industry Outlook - Future Market Insights highlights key players in the electric boats market, including Vision Marine Technologies, and notes that companies are enhancing capabilities through partnerships to meet growing demand [17][18]

Core Viewpoint - Massimo Group's marine division, Massimo Marine, has partnered with Vision Marine Technologies to develop a fully integrated 30-foot electric pontoon platform aimed at both commercial and recreational markets, highlighting a commitment to innovation and sustainability [1][4]. Company Overview - Massimo Marine, a subsidiary of Massimo Group, was established in 2020 and is based in Garland, Texas, focusing on manufacturing luxury pontoon and tritoon boats with a dedication to innovative design and quality craftsmanship [6][8]. - Vision Marine Technologies is recognized for its innovative E-Motion™ Electric Marine Powertrain Technology, which provides a zero-emission boating experience and has set multiple electric world speed records [5]. Market Insights - The U.S. pontoon boat market has shown growth, with sales reaching 115,000 units in 2023, reflecting a 5% increase from 2022, indicating robust demand for versatile and family-friendly watercraft [2]. Partnership Details - The collaboration will leverage Vision Marine's expertise in electric propulsion systems and Massimo Marine's manufacturing capabilities to create a reliable, turn-key electric solution for the marine industry [3]. - The partnership aims to enhance accessibility to electric boating solutions through a direct-to-consumer approach and Massimo Marine's extensive distribution network [3]. Industry Transformation - This collaboration is positioned as a significant step towards transforming the marine industry by addressing the demand for zero-emission solutions and potentially qualifying for various grants and incentives at multiple government levels [4].

[Independent Registered Public Accounting Firm's Report](index=2&type=section&id=Independent%20Registered%20Public%20Accounting%20Firm%27s%20Report) [Opinion and Going Concern](index=2&type=section&id=Opinion%20and%20Going%20Concern) Auditors issued an unqualified opinion on 2024 financial statements, but noted substantial doubt about the Company's going concern due to recurring losses and limited cash - A **substantial doubt** exists about the Company's ability to continue as a **going concern** due to **limited cash**, **recurring losses**, and an **accumulated deficit**[4](index=4&type=chunk)[11](index=11&type=chunk) - The auditors issued an **unqualified opinion** on the **FY 2024 financial statements**, stating they conform with **IFRS**[3](index=3&type=chunk) - The financial statements do not include any **adjustments** that might result from the **going concern uncertainty**[4](index=4&type=chunk)[11](index=11&type=chunk) - **M&K CPAS, PLLC** served as the auditor for 2024, while **Ernst & Young LLP** audited the 2023 and 2022 financials[3](index=3&type=chunk)[8](index=8&type=chunk)[15](index=15&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) [Consolidated statements of financial position](index=4&type=section&id=Consolidated%20statements%20of%20financial%20position) As of August 31, 2024, total assets decreased to **$11.4 million** from **$24.0 million**, primarily due to goodwill impairment and a sharp drop in cash, resulting in shareholders' equity falling to **$3.0 million** Consolidated Financial Position Highlights (in $) | Account | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | **Assets** | | | | Cash | 63,126 | 3,359,257 | | Inventories | 6,209,287 | 2,445,554 | | Goodwill | — | 9,680,941 | | **Total Assets** | **11,420,241** | **24,046,512** | | **Liabilities** | | | | Total Current Liabilities | 5,724,907 | 4,850,177 | | Derivative Liabilities | 2,180,389 | 5,558,822 | | **Total Liabilities** | **8,400,254** | **12,482,075** | | **Shareholders' Equity** | | | | Deficit | (65,609,357) | (51,548,737) | | **Total Shareholders' Equity** | **3,019,987** | **11,564,437** | - **Goodwill** was **completely written off**, decreasing from **$9.7 million** in 2023 to **zero** in 2024[17](index=17&type=chunk) - **Cash reserves plummeted** from **$3.36 million** to just **$63,126**[17](index=17&type=chunk) [Consolidated statements of changes in equity (deficit)](index=5&type=section&id=Consolidated%20statements%20of%20changes%20in%20equity%20%28deficit%29) Shareholders' equity decreased from **$11.6 million** to **$3.0 million** in FY2024, primarily due to a **$14.0 million** comprehensive loss, partially offset by capital raising activities - **Total comprehensive loss** for the year ended August 31, 2024, was **$13,966,200**[19](index=19&type=chunk) - The company **raised capital** through various securities issuances, including **preferred shares converted ($301,997)**, **warrants exchanged ($2,445,370)**, and **other issuances net of costs ($2,278,395)**[19](index=19&type=chunk) - The **accumulated deficit grew** to **$65.6 million** from **$51.5 million** in the prior year[19](index=19&type=chunk) [Consolidated statements of comprehensive loss](index=6&type=section&id=Consolidated%20statements%20of%20comprehensive%20loss) The Company reported a **$14.1 million** net loss in FY2024, an improvement from **$20.9 million** in 2023, influenced by an **$8.7 million** goodwill impairment and a **$7.5 million** net finance income Comprehensive Loss Highlights (in $) | Account | 2024 ($) | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | :--- | | Revenues | 3,794,345 | 5,651,502 | 7,350,946 | | Gross Profit | 1,497,438 | 1,536,426 | 3,285,565 | | Goodwill impairment loss | 8,704,182 | — | — | | Net finance (income) expense | (7,480,761) | (1,604,536) | 223,660 | | **Net loss for the period** | **(14,060,620)** | **(20,877,186)** | **(13,111,785)** | | Basic and diluted loss per share | (153.62) | (300.02) | (211.61) | - A **significant goodwill impairment loss** of **$8,704,182** was recognized in fiscal 2024[21](index=21&type=chunk) - **Net finance income of $7.5 million** was primarily due to a **$12.1 million gain on derivative liabilities**, which helped **offset operating and impairment losses**[21](index=21&type=chunk)[23](index=23&type=chunk) [Consolidated statements of cash flows](index=7&type=section&id=Consolidated%20statements%20of%20cash%20flows) The Company experienced a net decrease in cash of **$3.3 million** in FY2024, ending with **$63,126**, with **$11.6 million** used in operations, **$0.6 million** provided by investing, and **$7.7 million** from financing activities Cash Flow Summary (in $) | Activity | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Cash used in operating activities | (11,642,204) | (14,007,923) | | Cash provided by (used in) investing activities | 615,608 | (537,020) | | Cash provided by financing activities | 7,730,465 | 12,079,484 | | **Net decrease in cash** | **(3,296,131)** | **(2,465,459)** | | **Cash, end of year** | **63,126** | **3,359,257** | - The company raised **$6.5 million** from issuing **Convertible Preferred Shares and Warrants** and **$1.8 million** from issuing **Voting Common Shares and Warrants**[23](index=23&type=chunk) - The **sale of a subsidiary** generated **$1.1 million in cash proceeds**[23](index=23&type=chunk) [Notes to the consolidated financial statements](index=8&type=section&id=Notes%20to%20the%20consolidated%20financial%20statements) [Note 1. Incorporation and nature of business](index=8&type=section&id=1.%20Incorporation%20and%20nature%20of%20business) Vision Marine Technologies Inc., a Canadian company, manufactures and sells/rents electric boats, with seasonal operations peaking in Q4 for sales and summer for rentals, trading on Nasdaq as 'VMAR' - The company's **principal business** is the **manufacture and sale/rental of electric boats**[25](index=25&type=chunk) - **Operations are seasonal**, with **boat sales highest in the fourth quarter** and **rentals peaking in the summer months (May-August)**[27](index=27&type=chunk)[28](index=28&type=chunk) [Note 2. Basis of preparation and going concern uncertainty](index=8&type=section&id=2.%20Basis%20of%20preparation%20and%20going%20concern%20uncertainty) Financial statements are prepared on a going concern basis, but substantial doubt exists due to **$63,126** cash, recurring losses, and a **$65.6 million** deficit, with continuation dependent on uncertain future financing and two reverse stock splits implemented - As of August 31, 2024, the Company had cash of **$63,126**, **recurring losses**, and a deficit of **$65,609,357**, raising **substantial doubt** about its ability to continue as a **going concern**[31](index=31&type=chunk) - Management's plans to address the going concern issue include pursuing **cost savings** and seeking **additional financing**, having raised net proceeds of **$8.3 million** in FY 2024. However, **success is not guaranteed**[33](index=33&type=chunk) - The company executed **two reverse stock splits**: a **1-for-15 split** on **August 22, 2024**, and a **1-for-9 split** on **October 8, 2024**. **All share data has been adjusted**[39](index=39&type=chunk) [Note 5. Goodwill](index=30&type=section&id=5.%20Goodwill) The company recorded a total goodwill impairment loss of **$8,704,182** in FY2024, reducing the balance to zero, with impairments recognized in two stages due to industry downturn, operational issues, and unsuccessful sale attempts of the boat rental CGU - A **total goodwill impairment loss of $8,704,182** was recorded in FY 2024, **writing the goodwill balance down to nil** from **$9,680,941** at the end of FY 2023[123](index=123&type=chunk)[144](index=144&type=chunk) - The impairment was recognized in **two stages**: **$4,274,000** in the first half and an additional **$4,430,182** in the second half of the fiscal year[137](index=137&type=chunk)[144](index=144&type=chunk) - Reasons for impairment include a general **downturn in the boating industry**, continued unfavorable weather, disappointing results at rental locations, and **unsuccessful attempts to sell the boat rental operation**[143](index=143&type=chunk)[146](index=146&type=chunk) [Note 17. Derivative liabilities](index=41&type=section&id=17.%20Derivative%20liabilities) Derivative liabilities, valued at **$2.18 million** as of August 31, 2024, consist of warrants and convertible preferred shares, with a **$12.1 million** net gain from fair value changes significantly impacting net finance income, and new Series A and B Convertible Preferred Shares issued Derivative Liabilities Movement (in $) | Description | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Opening Balance | 5,558,822 | — | | Additions / Fair value at issuance | 20,398,329 | 7,614,510 | | Change in fair value (Gain) | (12,081,094) | (2,055,688) | | Other (re-pricing, conversion, etc.) | (1,695,468) | — | | **Closing Balance** | **2,180,389** | **5,558,822** | - The company **issued 3,000 Series A Convertible Preferred Shares for $4.0 million** and **3,000 Series B Convertible Preferred Shares for $4.0 million** in cash during FY 2024[192](index=192&type=chunk)[200](index=200&type=chunk) - A **gain of $12,081,094** was recorded in FY 2024 due to the **revaluation of derivative liabilities**, **significantly reducing the net loss**[23](index=23&type=chunk)[237](index=237&type=chunk) - The company recorded a **loss of $896,458 related to the re-pricing of warrants** and a **loss of $1,715,543 on a securities exchange transaction**[184](index=184&type=chunk)[194](index=194&type=chunk) [Note 19. Capital stock](index=49&type=section&id=19.%20Capital%20stock) In FY2024, capital stock increased to **$55.4 million** from **$50.4 million** due to various share issuances for cash, services, and preferred share conversions, alongside a securities exchange and a 1-for-15 reverse stock split - **Issued 2,763 Voting Common Shares and warrants for $1.78 million in net cash proceeds**[217](index=217&type=chunk) - **Issued 7,545 Voting Common Shares valued at $1,262,934 in exchange for marketing, consulting, and board fees**[216](index=216&type=chunk) - **Issued 11,642 Voting Common Shares upon the conversion of 650 Series A Convertible Preferred Shares**[218](index=218&type=chunk) - A **1-for-15 reverse stock split** was implemented on **August 22, 2024**[219](index=219&type=chunk) [Note 21. Revenues](index=54&type=section&id=21.%20Revenues) Total revenues for FY2024 were **$3.8 million**, a **33% decrease** from **$5.7 million** in 2023, primarily due to a **50% drop** in boat rental revenue, despite an increase in boat sales Revenue by Type (in $) | Revenue Type | 2024 ($) | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | :--- | | Sales of boats | 1,752,750 | 1,287,979 | 2,459,365 | | Sales of parts and boat maintenance | 95,168 | 324,720 | 97,721 | | Boat rental and boat club membership revenue | 1,946,427 | 4,038,803 | 4,793,860 | | **Total** | **3,794,345** | **5,651,502** | **7,350,946** | - **Total revenue decreased by 33% year-over-year**[21](index=21&type=chunk)[233](index=233&type=chunk) [Note 27. Segment information](index=63&type=section&id=27.%20Segment%20information) The company operates in 'Sale of electric boats' and 'Rental of electric boats' segments; in FY2024, sales generated **$1.85 million** revenue with a **$4.2 million** loss, while rentals generated **$1.95 million** revenue with a **$9.1 million** loss, including goodwill impairment Segment Performance FY 2024 (in $) | Segment | Revenue from external customers ($) | Segment loss before tax ($) | Segment assets (as of Aug 31, 2024) ($) | | :--- | :--- | :--- | :--- | | Sale of electric boats | 1,847,918 | (4,180,670) | 19,737,669 | | Rental of electric boats | 1,946,427 | (9,078,914) | 2,960,124 | - The **'Rental of electric boats' segment's large loss** is primarily due to the **goodwill impairment charge** allocated to it[123](index=123&type=chunk)[270](index=270&type=chunk) [Note 30. Deconsolidation of subsidiary](index=65&type=section&id=30.%20Deconsolidation%20of%20subsidiary) On April 25, 2024, the Company sold its subsidiary, EB Rental, Ltd., for **$1,089,302**, resulting in a **$175,589** gain on deconsolidation and ceasing consolidation of its financial results - **Sold 100% of EB Rental, Ltd. on April 25, 2024, for cash consideration of $1,089,302**[276](index=276&type=chunk) - A **gain of $175,589** was recorded on the **disposal of the subsidiary**[279](index=279&type=chunk) - The sale was to **EB Strategies Inc.**, which was considered a **related party** until the transaction closed[276](index=276&type=chunk) [Note 31. Subsequent events](index=67&type=section&id=31.%20Subsequent%20events) After fiscal year-end, the Company raised **$4.6 million** (net) in September 2024 and **$2.5 million** (net) in October/November 2024 through offerings, and executed a 1-for-9 reverse stock split on October 8, 2024 - On **September 16, 2024**, raised **$4.6 million net cash** from a **public offering of 377,778 Voting Common Shares**[280](index=280&type=chunk) - In **October/November 2024**, raised approximately **$2.5 million net cash** from an **'at the market' offering of 695,583 Voting Common Shares**[281](index=281&type=chunk) - Implemented a **1-for-9 reverse stock split** on **October 8, 2024**[282](index=282&type=chunk)

[Condensed Interim Consolidated Financial Statements](index=1&type=section&id=Condensed%20Interim%20Consolidated%20Financial%20Statements) [Consolidated Statements of Financial Position](index=2&type=section&id=Consolidated%20statements%20of%20financial%20position) As of February 29, 2024, the company's total assets decreased to $21.3 million from $24.0 million at August 31, 2023, primarily due to a significant goodwill impairment and a reduction in cash. Total liabilities increased to $14.9 million from $12.5 million, driven by a rise in derivative liabilities. Consequently, total shareholders' equity fell sharply to $6.4 million from $11.6 million, reflecting a growing deficit Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Items | As at Feb 29, 2024 ($) | As at Aug 31, 2023 ($) | Change | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Cash | 1,185,083 | 3,359,257 | ▼ | | Inventories | 4,781,765 | 2,445,554 | ▲ | | Goodwill | 5,431,975 | 9,680,941 | ▼ | | **Total Assets** | **21,333,492** | **24,046,512** | **▼** | | **Liabilities** | | | | | Total current liabilities | 5,022,253 | 4,850,177 | ▲ | | Derivative liabilities | 7,992,930 | 5,558,822 | ▲ | | **Total Liabilities** | **14,935,965** | **12,482,075** | **▲** | | **Shareholders' Equity** | | | | | Deficit | (58,930,757) | (51,548,737) | ▼ | | **Total Shareholders' Equity** | **6,397,527** | **11,564,437** | **▼** | [Consolidated Statements of Changes in Equity (Deficit)](index=3&type=section&id=Consolidated%20statements%20of%20changes%20in%20equity%20%28deficit%29) For the six months ended February 29, 2024, total shareholders' equity decreased from $11.6 million to $6.4 million. This was primarily driven by a net loss of $7.4 million, which was partially offset by $1.8 million raised from share issuances and $0.3 million from share-based compensation Changes in Equity for the Six-Month Period Ended Feb 29, 2024 (Unaudited) | Item | Amount ($) | | :--- | :--- | | Equity at Aug 31, 2023 | 11,564,437 | | Total comprehensive loss | (7,360,939) | | Share issuance | 1,777,819 | | Preferred Shares converted | 94,622 | | Share-based compensation | 321,588 | | **Equity at Feb 29, 2024** | **6,397,527** | [Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Consolidated%20statements%20of%20comprehensive%20income%20%28loss%29) For the six months ended February 29, 2024, the company reported a net loss of $7.4 million, an improvement from a $13.5 million loss in the prior-year period. The result was significantly impacted by a $4.3 million goodwill impairment loss and a net finance income of $4.4 million, which included a large gain on derivative liabilities. Revenues decreased to $1.7 million from $2.2 million year-over-year, while gross profit increased substantially to $655,611 from $153,600 due to lower cost of sales Six-Month Period Performance (Unaudited) | Metric | Six Months Ended Feb 29, 2024 ($) | Six Months Ended Feb 28, 2023 ($) | Change | | :--- | :--- | :--- | :--- | | Revenues | 1,715,003 | 2,230,955 | ▼ | | Gross Profit | 655,611 | 153,600 | ▲ | | Goodwill impairment loss | 4,274,000 | - | N/A | | Net finance (income) expense | (4,362,403) | 2,938,590 | Favorable | | **Net Loss** | **(7,382,020)** | **(13,487,720)** | **Improved** | | **Basic and Diluted Loss Per Share** | **(0.63)** | **(1.57)** | **Improved** | [Consolidated Statements of Cash Flows](index=5&type=section&id=Consolidated%20statements%20of%20cash%20flows) For the six months ended February 29, 2024, the company experienced a net cash decrease of $2.2 million. Cash used in operating activities was $10.0 million, driven by the net loss and an increase in inventories. Cash used in investing activities was minimal at $0.2 million. Financing activities provided $8.0 million in cash, primarily from the issuance of preferred shares, common shares, and warrants. The period ended with a cash balance of $1.2 million Cash Flow Summary for the Six-Month Period (Unaudited) | Cash Flow Activity | Ended Feb 29, 2024 ($) | Ended Feb 28, 2023 ($) | | :--- | :--- | :--- | | Cash used in operating activities | (9,957,547) | (7,212,655) | | Cash used in investing activities | (247,130) | (210,960) | | Cash provided by financing activities | 8,030,503 | 5,714,551 | | **Net decrease in cash** | **(2,174,174)** | **(1,709,064)** | | **Cash, end of period** | **1,185,083** | **4,115,652** | [Notes to the Condensed Interim Consolidated Financial Statements](index=6&type=section&id=Notes%20to%20the%20condensed%20interim%20consolidated%20financial%20statements) [Note 1: Incorporation and Nature of Business](index=6&type=section&id=1.%20Incorporation%20and%20nature%20of%20business) Vision Marine Technologies Inc., a Canadian company listed on Nasdaq (VMAR), primarily manufactures and sells or rents electric boats. The company's operations are seasonal, with electric boat sales peaking in the fourth quarter (summer) and rentals being highest from May to August - The company's principal business is the **manufacture and sale or rental of electric boats**[11](index=11&type=chunk) - Operations are **seasonal**: boat sales are **highest in the fourth quarter (June-August)**, and boat rentals are **highest from May to August**[13](index=13&type=chunk)[14](index=14&type=chunk) [Note 2: Basis of Preparation and Going Concern Uncertainty](index=6&type=section&id=2.%20Basis%20of%20preparation%20and%20going%20concern%20uncertainty) The financial statements are prepared under the assumption of a going concern, but there is substantial doubt about the company's ability to continue. As of February 29, 2024, the company had only $1.2 million in cash, an accumulated deficit of $58.9 million, and recurring negative cash flows. Management is pursuing additional financing and cost savings, having raised $8.3 million in the six-month period, but cannot guarantee success. The financial statements do not include adjustments that would be necessary if the company could not continue as a going concern - A **material uncertainty** exists that raises **substantial doubt** about the Company's ability to continue as a **going concern** for at least 12 months[20](index=20&type=chunk) Key Going Concern Indicators as of Feb 29, 2024 | Indicator | Value ($) | | :--- | :--- | | Cash | 1,185,083 | | Working Capital | 5,271,607 | | Accumulated Deficit | 58,930,757 | - Management's plans include pursuing **cost savings**, seeking **additional financing** from public and private markets, and potentially **selling non-core assets**. The company raised net proceeds of **$8,326,492** in the six months ended Feb 29, 2024[21](index=21&type=chunk) [Note 9: Goodwill](index=13&type=section&id=9.%20Goodwill) During the three months ended February 29, 2024, the company recorded a goodwill impairment loss of $4.3 million. This was related to the boat rental operation cash-generating unit (CGU). The impairment was triggered by continued unfavorable weather, a general downturn in the boating industry, and unsuccessful attempts to sell the operation, leading to revised, lower expectations for future revenue and EBITDA. The carrying amount of goodwill for this CGU was reduced to $5.4 million - A goodwill impairment loss of **$4,274,000** was recorded for the three-month period ended February 29, 2024, related to the boat rental operation CGU[52](index=52&type=chunk) - The impairment was triggered by a **downturn in the boating industry**, **unfavorable weather**, and **unsuccessful attempts to sell the boat rental operation**[56](index=56&type=chunk) - The recoverable amount was determined using a discounted cash flow model with a post-tax discount rate of **28.0%** and a terminal growth rate of **2%**[53](index=53&type=chunk)[55](index=55&type=chunk) [Note 15: Derivative Liabilities](index=16&type=section&id=15.%20Derivative%20liabilities) Derivative liabilities totaled $8.0 million as of February 29, 2024, a significant increase from $5.6 million at August 31, 2023. This balance is composed of warrants issued to common shareholders ($1.1 million), Series A Convertible Preferred Shares and related instruments ($2.5 million), and Series B Convertible Preferred Shares and related instruments ($4.3 million). These instruments are recorded at fair value, with changes recognized in net finance income/expense. During the period, the company repriced previously issued warrants and issued new Series A and B convertible preferred shares, leading to complex fair value adjustments [Warrants Issued to Common Shareholders](index=16&type=section&id=15.1%20Warrants%20issued%20to%20common%20shareholders) The derivative liability for warrants issued to common shareholders decreased to $1.1 million from $5.6 million. This was mainly due to a significant change in the fair value estimate, resulting in a $7.1 million reduction. On December 13, 2023, the company reduced the exercise price of 2,771,135 previously issued warrants to US$1.05, which caused an initial $1.9 million increase in the liability's fair value - On December 13, 2023, the exercise price of **2,771,135** previously issued warrants was reduced to **US$1.05**[69](index=69&type=chunk) Movement in Warrant Derivative Liability | Description | Amount ($) | | :--- | :--- | | Opening balance (Aug 31, 2023) | 5,558,822 | | Additions | 765,733 | | Effect on fair value of repricing | 1,871,499 | | Change in estimate of fair value | (7,090,926) | | **Closing balance (Feb 29, 2024)** | **1,105,128** | [Series A Convertible Preferred Shares](index=18&type=section&id=15.2%20Series%20A%20Convertible%20Preferred%20Shares) On December 21, 2023, the company issued 3,000 Series A Convertible Preferred Shares for $4.0 million (US$3.0 million). These instruments, including associated warrants and options, are treated as derivative liabilities. The initial fair value was $12.0 million, significantly higher than the cash received, resulting in a deferred loss. As of February 29, 2024, the carrying value of this liability was $2.5 million after revaluations and conversions of 139 shares into common stock - Issued **3,000** Series A Convertible Preferred Shares and **2,857,142** warrants for **$4,036,025** (**US$3,000,000**) on December 21, 2023[74](index=74&type=chunk) - The closing balance of the derivative liability for Series A shares as of Feb 29, 2024 was **$2,541,445**[79](index=79&type=chunk) [Series B Convertible Preferred Shares](index=19&type=section&id=15.3%20Series%20B%20Convertible%20Preferred%20Shares) On January 17, 2024, the company issued 3,000 Series B Convertible Preferred Shares for $4.0 million (US$3.0 million). Similar to the Series A shares, these instruments and their associated warrants are treated as derivative liabilities. The initial fair value was $6.3 million, also resulting in a deferred loss. As of February 29, 2024, the carrying value of this liability was $4.3 million - Issued **3,000** Series B Convertible Preferred Shares and **2,857,142** warrants for **$4,044,900** (**US$3,000,000**) on January 17, 2024[82](index=82&type=chunk) - The closing balance of the derivative liability for Series B shares as of Feb 29, 2024 was **$4,346,357**[84](index=84&type=chunk) [Note 16: Related Party Transactions](index=20&type=section&id=16.%20Related%20party%20transactions) The company engaged in significant transactions with related parties. For the six months ended February 29, 2024, this included $1.6 million in R&D expenses paid to Mac Engineering, SASU, an entity controlled by key management. Remuneration for directors and key management totaled $1.2 million for the six-month period. The company also leases its main premises from California Electric Boat Company Inc., another related party Key Related Party Transactions (Six Months Ended Feb 29, 2024) | Transaction | Party | Amount ($) | | :--- | :--- | :--- | | Research and Development | Mac Engineering, SASU | 1,580,776 | | Remuneration of directors and key management | - | 1,195,963 | - As of Feb 29, 2024, amounts due to related parties included in trade and other payables totaled **$90,744**[90](index=90&type=chunk) [Note 19: Revenues](index=26&type=section&id=19.%20Revenues) For the six months ended February 29, 2024, total revenue was $1.7 million, down from $2.2 million in the prior-year period. The decrease was driven by lower sales of boats and parts. Boat rental and club membership revenue remained the largest contributor at $1.4 million, though it also saw a decline from $1.7 million year-over-year. Revenues were primarily from the U.S Revenue Breakdown (Six-Month Period) | Revenue Source | Ended Feb 29, 2024 ($) | Ended Feb 28, 2023 ($) | Change | | :--- | :--- | :--- | :--- | | Sales of boats | 258,707 | 351,241 | ▼ | | Sales of parts and boat maintenance | 35,911 | 174,856 | ▼ | | Boat rental and boat club membership | 1,420,385 | 1,704,858 | ▼ | | **Total Revenue** | **1,715,003** | **2,230,955** | **▼** | [Note 22: Segment Information](index=27&type=section&id=22.%20Segment%20information) The company operates in two segments: 'Sale of electric boats' and 'Rental of electric boats'. For the six months ended February 29, 2024, the Rental segment generated $1.4 million in external revenue and a pre-tax loss of $4.7 million, which includes the $4.3 million goodwill impairment. The Sale of electric boats segment generated $0.3 million in external revenue and a pre-tax loss of $2.7 million, which includes a $6.3 million gain on derivative liabilities and $1.9 million in transaction costs Segment Performance (Six Months Ended Feb 29, 2024) | Segment | External Revenue ($) | Segment Profit (Loss) Before Tax ($) | Key Items | | :--- | :--- | :--- | :--- | | Sale of electric boats | 294,618 | (2,741,581) | Includes $6.3M gain on derivatives | | Rental of electric boats | 1,420,385 | (4,738,734) | Includes $4.3M goodwill impairment | Segment Assets as of Feb 29, 2024 | Segment | Segment Assets ($) | | :--- | :--- | | Sale of electric boats | 22,306,514 | | Rental of electric boats | 9,354,635 | | Inter-segment eliminations | (10,327,657) | | **Total** | **21,333,492** | [Note 24: Commitments](index=30&type=section&id=24.%20Commitments) The company has significant future financial commitments. This includes minimum purchase obligations under supply agreements amounting to $10.8 million for 2024. Additionally, there is an unrecorded lease arrangement for premises with undiscounted commitments totaling approximately $0.85 million from 2024 onwards - The company has minimum spend commitments under supply agreements of **$10,824,529** for 2024[128](index=128&type=chunk) [Note 25: Subsequent Events](index=31&type=section&id=25.%20Subsequent%20events) After the reporting period, on April 3, 2024, the company signed a letter of intent to sell 100% of its EB Rental, Ltd. subsidiary (the Newport Beach, California boat rental operation) for US$1 million to a related party, EB Strategies Inc. The company will retain its rental operations in Ventura, California, and Palm Beach, Florida. Additionally, 64,303 common shares were issued for services in March and April 2024 - On **April 3, 2024**, the company signed a letter of intent to sell its Newport Beach, California boat rental operation (EB Rental, Ltd.) for **US$1 million** to a related party[132](index=132&type=chunk) - In March and April 2024, the company issued **64,303** Voting Common Shares in exchange for services[131](index=131&type=chunk)

[Condensed Interim Consolidated Financial Statements](index=1&type=section&id=Condensed%20Interim%20Consolidated%20Financial%20Statements) [Consolidated statements of financial position](index=2&type=section&id=Consolidated%20statements%20of%20financial%20position) The company's balance sheet shows a decrease in total assets to $22.9 million and a significant reduction in liabilities, resulting in increased shareholders' equity Consolidated Balance Sheet Highlights (Unaudited) | Financial Metric | As at Nov 30, 2023 ($) | As at Aug 31, 2023 ($) | Change | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Cash | 841,988 | 3,359,257 | ▼ $2,517,269 | | Inventories | 3,182,731 | 2,445,554 | ▲ $737,177 | | Total Current Assets | 7,504,902 | 8,487,113 | ▼ $982,211 | | Total Assets | 22,884,629 | 24,046,512 | ▼ $1,161,883 | | **Liabilities & Equity** | | | | | Total Current Liabilities | 6,003,051 | 4,850,177 | ▲ $1,152,874 | | Derivative Liabilities | 913,387 | 5,558,822 | ▼ $4,645,435 | | Total Liabilities | 8,771,488 | 12,482,075 | ▼ $3,710,587 | | Total Shareholders' Equity | 14,113,141 | 11,564,437 | ▲ $2,548,704 | [Consolidated statements of changes in equity (deficit)](index=3&type=section&id=Consolidated%20statements%20of%20changes%20in%20equity%20%28deficit%29) Shareholders' equity increased by $2.55 million during the quarter, driven by net income and proceeds from share issuance Changes in Shareholders' Equity (For the three-months ended November 30, 2023) | Description | Amount ($) | | :--- | :--- | | **Shareholders' equity as at August 31, 2023** | **11,564,437** | | Net income for the period | 1,025,129 | | Other comprehensive income | 28,520 | | Share issuance | 1,420,722 | | Share-based compensation | 74,333 | | **Shareholders' equity as at November 30, 2023** | **14,113,141** | [Consolidated statements of comprehensive income (loss)](index=4&type=section&id=Consolidated%20statements%20of%20comprehensive%20income%20%28loss%29) The company achieved a net income of $1.03 million, a significant turnaround driven by a substantial non-cash gain on derivative liabilities Comprehensive Income (Loss) Summary (Unaudited) | Metric | Three months ended Nov 30, 2023 ($) | Three months ended Nov 30, 2022 ($) | | :--- | :--- | :--- | | Revenues | 986,392 | 1,399,760 | | Gross Profit | 435,528 | 104,276 | | Research and development | 984,506 | 3,687,197 | | Net finance income | (5,224,179) | (145,660) | | **Net income (loss) for the period** | **1,025,129** | **(6,786,441)** | | **Basic and diluted income (loss) per share** | **0.09** | **(0.81)** | [Consolidated statements of cash flows](index=5&type=section&id=Consolidated%20statements%20of%20cash%20flows) The company's cash position decreased by $2.52 million, with operating activities using $4.10 million and financing activities providing $1.58 million Cash Flow Summary (Unaudited) | Cash Flow Activity | Three months ended Nov 30, 2023 ($) | Three months ended Nov 30, 2022 ($) | | :--- | :--- | :--- | | Cash used in operating activities | (4,104,665) | (3,950,689) | | Cash provided by (used in) investing activities | 11,326 | (143,202) | | Cash provided by (used in) financing activities | 1,576,070 | (75,927) | | **Net decrease in cash** | **(2,517,269)** | **(4,169,818)** | | **Cash, end of period** | **841,988** | **1,654,898** | [Notes to the condensed interim consolidated financial statements](index=6&type=section&id=Notes%20to%20the%20condensed%20interim%20consolidated%20financial%20statements) This section details accounting policies, a going concern uncertainty, segment revenues, and significant subsequent financing events [Note 1. Incorporation and nature of business](index=6&type=section&id=Note%201.%20Incorporation%20and%20nature%20of%20business) The company primarily manufactures, sells, and rents electric boats, with business operations subject to seasonal fluctuations - The Company's principal business is the manufacture and sale or rental of electric boats[10](index=10&type=chunk) - The sale of electric boats is seasonal, with most purchases occurring in the **fourth quarter (June-August)**[13](index=13&type=chunk) - The rental of electric boats is also seasonal, with peak activity from **May to August**[14](index=14&type=chunk) [Note 2. Basis of preparation and going concern uncertainty](index=6&type=section&id=Note%202.%20Basis%20of%20preparation%20and%20going%20concern%20uncertainty) The company faces a material going concern uncertainty due to recurring losses and negative cash flows, despite recent financing efforts - A material uncertainty exists that raises substantial doubt about the Company's ability to continue as a going concern due to **recurring losses, negative cash flows from operations, and a deficit of $50,523,608** since inception[19](index=19&type=chunk) - Management is seeking additional financing from public and private markets, having raised **net proceeds of $1,781,194** from share issuance in the quarter[20](index=20&type=chunk) [Note 5. Investment in Limestone](index=10&type=section&id=Note%205.%20Investment%20in%20Limestone) The investment in The Limestone Boat Company Limited was fully impaired in the prior fiscal year and remains valued at nil - On January 20, 2023, Limestone's U.S. subsidiaries filed for Chapter 7 bankruptcy, leading the Company to record a **full impairment on the debentures valued at $2,637,000** for the year ended August 31, 2023[36](index=36&type=chunk) - The Company maintained the fair value of its investment in Limestone at **nil** as at November 30, 2023[37](index=37&type=chunk) [Note 14. Related party transactions](index=15&type=section&id=Note%2014.%20Related%20party%20transactions) The company engaged in significant related party transactions, including R&D expenses and key management remuneration - For the three months ended November 30, 2023, the company incurred **R&D expenses of $791,906** from Mac Engineering, SASU, a related party[49](index=49&type=chunk) - As of November 30, 2023, total amounts due to related parties included in trade and other payables were **$229,483**, a significant increase from $62,274 at August 31, 2023[51](index=51&type=chunk) Remuneration of Directors and Key Management | Category | Three months ended Nov 30, 2023 ($) | Three months ended Nov 30, 2022 ($) | | :--- | :--- | :--- | | Wages | 502,015 | 621,863 | | Share-based payments | 88,142 | 64,291 | | **Total** | **590,157** | **686,154** | [Note 15. Capital stock](index=17&type=section&id=Note%2015.%20Capital%20stock) The company issued new shares for $1.78 million and recognized a $5.41 million gain from revaluing derivative liabilities - Issued 372,870 Voting Common Shares and warrants for a **net cash consideration of $1,781,194**[53](index=53&type=chunk) Movement in Derivative Liabilities | Description | Amount ($) | | :--- | :--- | | Opening balance (Aug 31, 2023) | 5,558,822 | | Additions | 765,733 | | Change in estimate of fair value | (5,411,168) | | **Closing balance (Nov 30, 2023)** | **913,387** | [Note 17. Revenues](index=21&type=section&id=Note%2017.%20Revenues) Quarterly revenue decreased to $0.99 million, with boat rentals and club memberships being the primary source of income Revenue by Type | Revenue Stream | Three months ended Nov 30, 2023 ($) | Three months ended Nov 30, 2022 ($) | | :--- | :--- | :--- | | Sales of boats | 88,093 | 157,285 | | Sales of parts and boat maintenance | 30,497 | 90,836 | | Boat rental and boat club membership | 867,802 | 1,151,639 | | **Total** | **986,392** | **1,399,760** | Revenue by Geography (Q1 FY2024) | Geography | Amount ($) | | :--- | :--- | | Canada | 45,326 | | USA | 941,066 | | Other | - | | **Total** | **986,392** | [Note 18. Net finance income](index=22&type=section&id=Note%2018.%20Net%20finance%20income) A net finance income of $5.22 million was reported, driven almost entirely by a non-cash gain on derivative liabilities Net Finance Income Breakdown | Item | Three months ended Nov 30, 2023 ($) | | :--- | :--- | | Interest and bank charges | 64,563 | | Interest income | (27,046) | | Transaction costs | 149,472 | | Gain on derivative liabilities | (5,411,168) | | **Total Net Finance Income** | **(5,224,179)** | [Note 20. Segment information](index=23&type=section&id=Note%2020.%20Segment%20information) The 'Sale of electric boats' segment reported a profit due to a non-cash gain, while the 'Rental' segment incurred a loss - The profit in the 'Sale of electric boats' segment includes a **gain on derivative liabilities of $5,411,168**[77](index=77&type=chunk) Segment Performance (Three months ended November 30, 2023) | Segment | Revenue from external customers ($) | Segment profit (loss) before tax ($) | | :--- | :--- | :--- | | Sale of electric boats | 118,590 | 1,126,640 | | Rental of electric boats | 867,802 | (165,505) | | **Total** | **986,392** | **968,270** | [Note 22. Commitments](index=25&type=section&id=Note%2022.%20Commitments) The company has significant future commitments, including $10.9 million in purchase obligations for fiscal year 2024 - The Company is subject to supply agreements with **minimum fixed and determinable purchase obligations of $10,943,420 for 2024**[80](index=80&type=chunk) [Note 23. Subsequent events](index=26&type=section&id=Note%2023.%20Subsequent%20events) Subsequent to the quarter, the company secured new financing, repriced warrants, and formed a strategic partnership - Announced a strategic partnership with Blue Water Boat Rental to provide 8 electric boats and **share 50% of the revenue**[83](index=83&type=chunk) - On Dec 21, 2023, issued 2,900 Series A Preferred Shares and warrants in a private placement for **net cash consideration of $3,254,227**[86](index=86&type=chunk) - On Jan 10, 2024, announced that the Government of Québec, through Investissement Québec, will subscribe for up to **US$3 million** in the Company's preferred shares[87](index=87&type=chunk)

PART I [Key Information](index=8&type=section&id=ITEM%203.%20KEY%20INFORMATION) The company faces significant risks from a history of net losses, reliance on an unlaunched product, and substantial capital requirements [Risks Related to Business and Industry](index=8&type=section&id=D.%20Risk%20Factors%20-%20Risks%20Related%20to%20our%20Business%20and%20Industry) The company's viability is threatened by growing net losses, dependency on a pre-commercial powertrain, and reliance on key suppliers Net Loss Trend (Fiscal Years 2021-2023) | Fiscal Year | Net Loss (in millions) | | :--- | :--- | | 2023 | $20.9 | | 2022 | $13.1 | | 2021 | $15.1 | - The company's primary growth strategy relies on its **electric powertrain system**, which is not yet launched and faces uncertain market acceptance[28](index=28&type=chunk) - The company is highly dependent on a few key suppliers for essential components, including hulls (**Aqualux, Abitibi & Co.**), motors (**Danfoss, E-Propulsion**), and battery packs (**Octillion, Neogy**)[37](index=37&type=chunk) - Revenue from the electric boat rental business (EBR) accounted for **71% of total revenues** in fiscal 2023, making the company susceptible to factors affecting this specific operation[40](index=40&type=chunk) - The company has identified a **material weakness** in its internal controls over financial reporting due to a lack of sufficient accounting personnel[98](index=98&type=chunk)[444](index=444&type=chunk) [Risks Related to Our Securities](index=29&type=section&id=D.%20Risk%20Factors%20-%20Risks%20Related%20to%20Our%20Securities) Securities risks include significant insider ownership, potential share dilution, high stock price volatility, and reduced investor protection as a foreign private issuer - As of November 28, 2023, executive officers and directors beneficially owned **27.6%** of the company's common shares, giving them significant influence over shareholder matters[101](index=101&type=chunk) - The company's common stock has experienced significant price volatility, with a closing price range on Nasdaq from **US$16.21 to US$1.72** between its November 2020 IPO and November 28, 2023[108](index=108&type=chunk) - The company **does not intend to pay dividends** in the foreseeable future, meaning any investment gain would need to come from share price appreciation[112](index=112&type=chunk) - As a **foreign private issuer**, the company is exempt from certain SEC reporting and proxy solicitation rules applicable to U.S. domestic companies, potentially providing less information to shareholders[116](index=116&type=chunk)[117](index=117&type=chunk) [Information on the Company](index=36&type=section&id=ITEM%204.%20INFORMATION%20ON%20THE%20COMPANY) The company manufactures and rents electric boats while focusing its strategy on commercializing its new E-Motion™ electric powertrain system [History and Development](index=36&type=section&id=A.%20History%20and%20development%20of%20the%20Company) Founded in 2012, the company went public on Nasdaq in 2020 and expanded into the boat rental business in 2021 - The company was incorporated in 2012 and changed its name to Vision Marine Technologies Inc. on **April 23, 2020**[124](index=124&type=chunk) - Completed its IPO on November 27, 2020, with net proceeds of approximately **US$24.94 million** and listed on Nasdaq under the symbol "VMAR"[126](index=126&type=chunk) - Acquired an electric boat rental business in California in June 2021 for approximately **$9.02 million**, which generated $4.04 million in revenue in fiscal 2023[127](index=127&type=chunk) [Business Overview](index=37&type=section&id=B.%20Business%20Overview) The business centers on the high-efficiency E-Motion™ powertrain, with key manufacturing and integration partnerships supporting its pre-commercial strategy - The company's electric outboard powertrain system has recorded efficiencies of **more than 96%**, significantly higher than the 54% efficiency noted for a competitor's product[130](index=130&type=chunk)[139](index=139&type=chunk) - The company has a manufacturing and supply agreement with **Linamar Corporation** to mass-produce the E-Motion™ powertrain[61](index=61&type=chunk)[141](index=141&type=chunk) - A partnership was launched with **Group Beneteau** to integrate Vision Marine's outboard motors, with an initial purchase order received from Wired Pontoon for 25 E-Motion™ 180E units[148](index=148&type=chunk)[149](index=149&type=chunk) Powerboat Sales (Units) | Fiscal Year | Powerboats Sold | | :--- | :--- | | 2023 | 46 | | 2022 | 58 | | 2021 | 49 | [Organizational Structure](index=61&type=section&id=C.%20Organizational%20structure) Vision Marine Technologies Inc. is a parent company with five direct and indirect wholly-owned subsidiaries - The company has **two direct wholly-owned subsidiaries** and **three indirect wholly-owned subsidiaries**[124](index=124&type=chunk)[229](index=229&type=chunk) [Property, Plant and Equipment](index=61&type=section&id=D.%20Property%2C%20plant%20and%20equipment) The company leases all its properties, including its primary manufacturing facility in Quebec and rental locations in California - The main manufacturing and office space in Boisbriand, Quebec is leased from a **related party**, California Electric Boat Company Inc[229](index=229&type=chunk)[353](index=353&type=chunk) - The company leases office and marina space in **Newport Beach, California**, and a kiosk and slips in **Ventura, California**, for its boat rental business[230](index=230&type=chunk)[231](index=231&type=chunk) [Operating and Financial Review and Prospects](index=62&type=section&id=ITEM%205.%20OPERATING%20AND%20FINANCIAL%20REVIEW%20AND%20PROSPECTS) Financial performance worsened in FY2023 with a 23% revenue decrease and a wider net loss, raising material uncertainty about its going concern status [Operating Results](index=64&type=section&id=A.%20Operating%20Results) Fiscal 2023 revenue fell 23% to $5.7 million and net loss widened to $20.9 million due to lower sales and higher expenses FY 2023 vs. FY 2022 Operating Results | Metric | FY 2023 | FY 2022 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | **$5,651,502** | **$7,350,946** | **(23)%** | | - Sale of Electric Boats | $1,612,699 | $2,557,086 | (37)% | | - Rental of electric boats | $4,038,803 | $4,793,860 | (16)% | | **Gross Profit** | **$1,536,426** | **$3,285,565** | **(53)%** | | **Net Loss** | **($20,877,186)** | **($13,111,785)** | **59%** | - The increase in net loss in FY2023 was driven by higher R&D expenses (**$5.7M** vs $2.2M), increased selling & marketing (**$3.5M** vs $2.0M), and a **$2.6M impairment loss** on the Limestone investment[241](index=241&type=chunk)[243](index=243&type=chunk) FY 2022 vs. FY 2021 Operating Results | Metric | FY 2022 | FY 2021 | Change | | :--- | :--- | :--- | :--- | | **Revenue** | **$7,350,946** | **$3,513,788** | **109%** | | **Gross Profit** | **$3,285,565** | **$1,604,182** | **105%** | | **Net Loss** | **($13,111,785)** | **($15,113,907)** | **(14)%** | [Liquidity and Capital Resources](index=68&type=section&id=B.%20Liquidity%20and%20Capital%20Resources) The company faces significant liquidity challenges, with negative operating cash flow and a noted going concern uncertainty - The company's financial statements include a **going concern uncertainty** due to recurring losses, a deficit of **$51.5 million**, and negative cash flow from operations[238](index=238&type=chunk)[251](index=251&type=chunk)[504](index=504&type=chunk) Summary of Cash Flows (in $) | | Year ended August 31, 2023 | Year ended August 31, 2022 | Year ended August 31, 2021 | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | (14,007,923) | (10,996,819) | (8,251,438) | | Net cash used in investing activities | (537,020) | (964,503) | (9,468,395) | | Net cash provided by/(used in) financing activities | 12,079,484 | (361,783) | 34,570,833 | - Working capital surplus decreased from **$8.7 million** at FYE 2022 to **$3.7 million** at FYE 2023[253](index=253&type=chunk) [Critical Accounting Estimates](index=71&type=section&id=E.%20Critical%20Accounting%20Estimates) Key accounting estimates involve impairment assessments using a DCF model, share-based payments, and lease term judgments - Impairment of non-financial assets, particularly goodwill, is assessed using a DCF model with a **28% post-tax discount rate** and a **2% long-term growth rate**[268](index=268&type=chunk)[582](index=582&type=chunk) - The fair value of share-based payments is determined using the **Black-Scholes model**, which requires judgment on inputs like expected life and historical volatility[277](index=277&type=chunk)[588](index=588&type=chunk) - Determining the lease term for right-of-use assets and liabilities requires judgment on whether **extension options are reasonably certain** to be exercised[278](index=278&type=chunk)[589](index=589&type=chunk) [Directors, Senior Management and Employees](index=74&type=section&id=ITEM%206.%20DIRECTORS%2C%20SENIOR%20MANAGEMENT%20AND%20EMPLOYEES) The company is led by an experienced management team and a seven-member board, with compensation tied to salary, bonuses, and stock options [Directors and Senior Management](index=74&type=section&id=A.%20Directors%20and%20Senior%20Management) The leadership team includes the CEO, CFO, and COO/CTO, with a seven-member board chaired by Carter Murray Key Management and Directors | Name | Position | | :--- | :--- | | Alexandre Mongeon | Chief Executive Officer and Director | | Kulwant Sandher | Chief Financial Officer | | Xavier Montagne | Chief Technology Officer and Chief Operating Officer | | Carter Murray | Chairman | | Dr. Philippe Couillard | Director | [Compensation](index=76&type=section&id=B.%20Compensation) Executive compensation includes fixed salaries, discretionary bonuses, and option awards, with total FY2023 CEO compensation at $620,354 Executive Compensation Summary (FY 2023) | Named Executive Officer | Position | Total Compensation ($) | | :--- | :--- | :--- | | Alexandre Mongeon | CEO | 620,354 | | Patrick Bobby | President of Special Operations | 414,893 | | Kulwant Sandher | CFO | 395,426 | | Xavier Montagne | CTO & COO | 533,103 | - The company's 2020 Share Option Plan authorizes **1,764,952 shares**, with **1,099,541 options outstanding** as of August 31, 2023[324](index=324&type=chunk)[325](index=325&type=chunk)[329](index=329&type=chunk) - Executive employment agreements for the CEO, CFO, and Head of Special Projects include provisions for severance payments equal to **one year's base salary** upon termination without cause[298](index=298&type=chunk)[304](index=304&type=chunk)[309](index=309&type=chunk) [Board Practices](index=88&type=section&id=C.%20Board%20Practices) The seven-member board includes four independent directors and operates with Audit, Compensation, and Nominating committees - The Board has **seven directors**, **four of whom are independent** according to Nasdaq listing rules[334](index=334&type=chunk) - The Board has three standing committees: **Audit, Compensation, and Nominating**[336](index=336&type=chunk) - **Luisa Ingargiola** serves as the Audit Committee Financial Expert[337](index=337&type=chunk)[451](index=451&type=chunk) [Employees](index=90&type=section&id=D.%20Employees) As of August 31, 2023, the company employed 46 individuals, none of whom are covered by a collective bargaining agreement Employee Count as of August 31, 2023 | Category | Number of Employees | | :--- | :--- | | Full-Time | 38 | | Part-Time | 8 | | **Total** | **46** | - None of the company's employees are represented by a **labor union**[342](index=342&type=chunk) [Major Shareholders and Related Party Transactions](index=91&type=section&id=ITEM%207.%20MAJOR%20SHAREHOLDERS%20AND%20RELATED%20PARTY%20TRANSACTIONS) Directors and executives hold 27.6% of shares, and the company engages in significant related party transactions, including facility leases [Major Shareholders](index=91&type=section&id=A.%20Major%20Shareholders) Directors and executives beneficially own 27.6% of common shares, with the CEO and President of Special Operations as the largest holders Beneficial Ownership (as of Nov 28, 2023) | Shareholder | Percentage Owned | | :--- | :--- | | Directors and Executive Officers (as a group) | 27.6% | | Alexandre Mongeon (CEO) | 21.5% | | Patrick Bobby (President of Special Operations) | 19.1% | | Société De Placements Robert Ghetti Inc. | 9.2% | | James Stafford | 8.2% | [Related Party Transactions](index=93&type=section&id=B.%20Related%20Party%20Transactions) Material related party transactions include facility leases with a CEO-affiliated entity and an IP acquisition from the CTO/COO's former company - The company leases its manufacturing and office facilities in Boisbriand, Quebec, from California Electric Boat Company Inc., an entity **affiliated with the CEO**, under three separate lease agreements expiring in March 2027[353](index=353&type=chunk)[355](index=355&type=chunk) - In February 2021, the company acquired intellectual property for **$1,035,070** from Mac Engineering, SASU, whose CEO subsequently became Vision Marine's **CTO and later COO**[353](index=353&type=chunk)[607](index=607&type=chunk) - Prior to its acquisition, EBR, an entity **affiliated with the CEO**, purchased **$101,684** of boats and parts from the company in fiscal 2021[353](index=353&type=chunk) [Financial Information](index=97&type=section&id=ITEM%208.%20FINANCIAL%20INFORMATION) The report includes IFRS-compliant financial statements for FY2021-2023, with no material legal proceedings or plans to pay dividends - The consolidated financial statements for the years ended August 31, 2023, 2022, and 2021 are prepared in accordance with **IFRS** and audited by **Ernst & Young LLP**[357](index=357&type=chunk) - The company has not paid dividends since its incorporation and **does not plan to pay any** in the foreseeable future[359](index=359&type=chunk) [Additional Information](index=98&type=section&id=ITEM%2010.%20ADDITIONAL%20INFORMATION) The company's structure allows for unlimited shares, and it raised capital via multiple 2023 securities agreements while navigating Canadian regulations [Memorandum and Articles of Association](index=98&type=section&id=B.%20Memorandum%20and%20Articles%20of%20Association) The company's articles authorize unlimited common and preferred shares, with a board of one to ten members elected annually - The company's authorized capital consists of an **unlimited number of common shares** (issuable in four series) and an **unlimited number of preferred shares**[372](index=372&type=chunk) - The Board of Directors is authorized to have between **one and ten members**[370](index=370&type=chunk) [Material Contracts](index=100&type=section&id=C.%20Material%20Contracts) The company entered into a series of securities purchase agreements in 2023 to raise capital through direct offerings and private placements - The company executed **multiple securities purchase agreements in 2023** (January, February, April, June, July, September) to sell common shares and warrants, raising capital through a combination of registered direct offerings and private placements[378](index=378&type=chunk)[380](index=380&type=chunk)[382](index=382&type=chunk)[383](index=383&type=chunk)[385](index=385&type=chunk)[388](index=388&type=chunk) [Taxation](index=105&type=section&id=E.%20Taxation) This subsection summarizes U.S. federal income tax considerations for shareholders, including dividend treatment and potential PFIC classification - The company **does not believe it was a PFIC** in the preceding year or will be in the current or future years, but notes that this determination is complex and subject to change[415](index=415&type=chunk) - Distributions treated as dividends are expected to be taxed at preferential rates for eligible non-corporate U.S. Holders, as the company believes it is a **"qualified foreign corporation"**[411](index=411&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=110&type=section&id=ITEM%2011.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company is exposed to credit, liquidity, interest rate, and foreign exchange risks, particularly from its U.S. dollar transactions - The company is exposed to **liquidity risk** and believes its recurring financial resources are adequate to cover expenditures[424](index=424&type=chunk) - The company faces **foreign exchange risk** due to a mismatch between its Canadian dollar functional currency and its U.S. dollar-denominated transactions and balances[427](index=427&type=chunk)[662](index=662&type=chunk) Foreign Currency Exposure (USD assets/liabilities in CAD equivalent) | As of August 31, | 2023 | 2022 | | :--- | :--- | :--- | | Cash | $3,258,419 | $5,142,703 | | Trade and other receivables | $188,001 | $103,116 | | Trade and other payables | $800,149 | $172,871 | PART II [Controls and Procedures](index=73&type=section&id=ITEM%2015.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls were ineffective as of August 31, 2023, due to a material weakness in financial reporting personnel - The CEO and CFO concluded that disclosure controls and procedures were **not effective** as of August 31, 2023[442](index=442&type=chunk) - A **material weakness** was identified in internal controls over financial reporting due to a **lack of sufficient accounting and finance personnel** for complex and non-routine transactions[444](index=444&type=chunk) - Management is taking steps to **remediate the material weakness** by hiring more personnel and designing revised controls and procedures[447](index=447&type=chunk) [Corporate Governance and Other Disclosures](index=74&type=section&id=ITEM%2016.%20Corporate%20Governance%20and%20Other%20Disclosures) The company follows Canadian home country governance practices, which differ from Nasdaq rules, and paid its auditor $460,306 in FY2023 Principal Accountant Fees (Ernst & Young LLP) | Fee Type | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Audit Fees | $421,963 | $438,757 | | Tax Fees | $38,343 | $— | | **Total** | **$460,306** | **$438,757** | - The company, as a **foreign private issuer**, follows its home country (Canadian) governance practices, which differ from Nasdaq rules regarding executive sessions, committee charters, and shareholder quorum requirements[463](index=463&type=chunk) - The company's quorum requirement for shareholder meetings is **50%** of outstanding shares, differing from the Nasdaq minimum of **33 1/3%**[469](index=469&type=chunk) PART III [Financial Statements](index=77&type=section&id=ITEM%2018.%20FINANCIAL%20STATEMENTS) The audited IFRS financial statements for FY2021-2023 are presented, with the auditor's report noting a material uncertainty related to going concern [Report of Independent Registered Public Accounting Firm](index=123&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Ernst & Young LLP issued a standard audit opinion but included an emphasis paragraph highlighting substantial doubt about the company's going concern status - The auditor's report includes a paragraph highlighting a **material uncertainty** that raises **substantial doubt** about the Company's ability to continue as a **going concern** due to recurring losses[485](index=485&type=chunk) [Consolidated Financial Statements](index=125&type=section&id=Consolidated%20Financial%20Statements) Financials show a decline in assets and equity in FY2023, with a comprehensive loss of $20.5 million and increased liabilities Consolidated Statement of Financial Position (Selected Items) | As at August 31, | 2023 ($) | 2022 ($) | | :--- | :--- | :--- | | Total Current Assets | 8,487,113 | 11,600,940 | | Total Assets | 24,046,512 | 29,100,209 | | Total Current Liabilities | 4,850,177 | 2,873,929 | | Total Liabilities | 12,482,075 | 5,071,613 | | Total Shareholders' Equity | 11,564,437 | 24,028,596 | Consolidated Statement of Comprehensive Loss | For the year ended August 31, | 2023 ($) | 2022 ($) | 2021 ($) | | :--- | :--- | :--- | :--- | | Revenues | 5,651,502 | 7,350,946 | 3,513,788 | | Net loss for the period | (20,877,186) | (13,111,785) | (15,113,907) | | Total comprehensive loss | (20,542,229) | (12,802,680) | (14,725,341) | | Basic and diluted loss per share | (2.25) | (1.58) | (2.04) | [Notes to the Consolidated Financial Statements](index=131&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) Notes detail accounting policies, segment performance showing a ($20.4M) loss in the sales segment, and significant future purchase commitments - The company has two reportable segments: Sale of electric boats and Rental of electric boats; for FY2023, the sales segment had a loss before tax of **($20.4M)** while the rental segment had a loss of **($0.6M)**[666](index=666&type=chunk)[668](index=668&type=chunk) - Warrants with an exercise price in U.S. dollars are classified as **derivative liabilities** and measured at fair value, resulting in a **$5.6 million liability** on the balance sheet as of August 31, 2023[541](index=541&type=chunk)[624](index=624&type=chunk) - The company has minimum spend commitments under supply agreements totaling **$10,943,420** for fiscal year 2024[264](index=264&type=chunk)[671](index=671&type=chunk) - An **impairment loss of $2,637,000** was recorded in FY2023 on the company's investment in The Limestone Boat Company debentures following the bankruptcy filing of Limestone's subsidiaries[599](index=599&type=chunk)